Business taxes shift onto homes in tax shuffle

WATERLOO REGION — Homeowners face a small regional tax increase — estimated at 1.5 per cent phased in over four years in local cities — because residences are gaining value faster than businesses.

It’s an impact of the latest property reassessment, which revalued properties across the region starting this year.

Unless politicians intervene, some property taxes paid by businesses will shift to homeowners and apartment buildings in a phase-in concluding in 2016. The opposite happened in the previous reassessment, when some residential taxes shifted onto businesses.

“It’s a relatively minor impact on the residential taxpayer,” said Angela Hinchberger, who advises regional council on tax policy.

The owner of an average home valued at $281,000 in Kitchener, Waterloo and Cambridge can expect to pay an extra $26 a year by 2016. The increase will be smaller for a township home — an extra $20 by 2016, representing a regional tax increase of 1.3 per cent.

Reassessment does not generate more taxes but shifts taxes among different properties and among different kinds of properties.

It’s not all bleak news for homeowners. Education taxes will fall slightly, partly offsetting the regional increase. Taxes owed to cities and townships will change but impacts will vary by community. The regional impact will likely dominate as regional taxes account for half of property taxes.

Politicians could spare homeowners by altering tax policy to shift taxes back onto businesses. Regional council plans to debate the issue in March.

Such a move, however, would be a change of pace — council policy has been to lighten the tax burden for businesses rather than deepen it.

Council currently taxes businesses almost twice as heavily as residences. That’s a much lighter burden than in years past as the province urges communities to tax homes and businesses equally.

Reassessment found that homes gained value at twice the rate of businesses and three times the rate of industries between 2008 and 2012.